- The Basic and Premium Memberships have the unique opportunity of using our investment strategy that selects good companies which are temporarily undervalued by the stock market.
- We are going to present two actual examples of applying the strategy starting from July 1, 2021, using 3 and 10 stocks as number of stocks to keep in portfolio.
- Each example requires only 10 to 15 minutes of trading each month, demonstrating how easy and quick is maintaining your portfolio adherent to The Everest Formula.
If you are interested in applying the Everest Strategy described here, consider to register now.
Overview of the Everest Strategy
The Everest Strategy’s goal is to keep in portfolio the best stocks computed by the Everest Formula. Once a week, the strategy checks and (if needed) updates the stocks in the portfolio, replacing stocks that exited from the first positions with the new stocks that entered in it.
Why weekly and not daily, monthly or yearly? Because backtests have shown that updating your portfolio on a weekly basis is the best trade off for catching the chances that the market offers at the right moment, without sacrificing time and money for commissions.
How to choose between 3, 5, 10, 20… stocks to own? Generally speaking, an investment portfolio that uses more stocks offers less volatility but tends to align the results to the market, whereas using fewer stocks offers better performance (if the strategy is good), but can bring to more volatility and periods with negative returns. The Everest Strategy backtests suggest to keep the stock number between 3 and 10.
Applying the Everest Strategy – 10 Stocks
Let’s suppose we subscribed to the Everest Formula on July 1, 2021 and have 10k dollars that want to invest in it. We choose to buy 10 stocks for our portfolio, because we want to balance the performance with a contained volatility for our risk tolerance. Opening the Everest Screener on that day, we would see the following companies:
We need to split out our 10k dollars among the first 10 stocks, buying approximately $ 1,000 of each company’s shares with our broker. Here is our portfolio situation after the purchases:
We don’t want to check the screener every week, hence we set to receive the newsletter with the top 10 stocks every Monday, via email. We can do it in the profile page.
Next monday (July the 5th) we receive an email with the following stocks:
Nothing has changed in the top 10 stocks, so we don’t need to change anything in our portfolio. The same happens on July the 12th. On July the 19th we receive a new mail with the updated ranking:
Here there are some variations: MOH overcame QDEL to the 1st position, and the same happened between EME and WHR. But we don’t need to do any change in our portfolio because we decided to own 10 stocks, and within the first 10 stocks we don’t care about internal position exchanges. NOTE: Only if we had decided to keep a portfolio of 7 stocks, we would have sold WHR and bought EME.
The next Monday (July the 26th) the situation changes again and a new stock is entering the top 10 list:
We need to buy SNX and sell CRI that came out from the list. We also take advantage of the trades to rebalance the portfolio, in order to have our money equally distributed among the 10 stocks again. This step is optional, but can help to keep your portfolio well diversified and to take advantage of the stocks that have become more undervalued from the last transactions.
The image below shows a recap of the transactions, in order to purchase SNX, sell CRI and rebalance the portfolio:
We notice that from the 1st of July until the 26th of the same month, the market value of our portfolio remained roughly the same. That is completely possible: The Everest Strategy is not intended for short term gains. Looking at the backtests, there are some months in which the Formula produced flat or negative results. But in the long run, it has produced amazing results. For this reason, it is important to keep the strategy one or more years to appreciate its effectiveness.
Indeed, continuing with the process of weekly checks and updates described till now, the strategy have started to collects some gains from the end of August, and until today (October, 20) it has returned about 11%, compared to the 5% of the S&P500 on the same timeframe.
Applying the Everest Strategy – 3 Stocks
Like in the previous chapter, we imagine to be investors that subscribe to the Everest Formula on July 1st, 2021 and have 10k dollars to invest in it. Now we choose to buy only 3 stocks, because we don’t care about volatily and want to maximize the performance of our portfolio. Here’s a recap of the top 10 stocks on July 1, 2021:
We split out our $ 10,000 among the first 3 stocks, buying approximately $3,300 dollars of QDEL, MOH and DKS in our broker. Here’s our portfolio situation after the purchases:
Using the same process explained for the 10 stocks strategy, we receive the top 10 stocks through the newsletter every Monday, or we can check it personally through the Everest Screener, and update the portfolio only if something changes in the first 3 positions of the rank. This won’t happen until the 9th of August, where WFG and LPX will have replaced QDEL and DKS in the first 3 positions:
The image below shows the transactions made on August 9:
Continuing with the process of weekly checks and updates described till now, the strategy with 3 stocks until today (October the 20th) has returned about 18.7%, compared to the 5% of the S&P500 on the same timeframe.
Conclusion
It is extremely easy to apply the Everest Formula: you just need to keep an eye on the newsletter with the top stocks once a week, and only trading if needed, on average once a month, sometimes even less. On the other hand, the great returns that the Everest Formula provides you are worth the little time needed to implement it.
If you want to test it on your own, register now or contact us.
